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While the world waited with bated breath for resolution of the bitter battle of the fiscal cliff, the telling moment of that monumental clash between the warring parties was an exchange a few steps removed from the Oval Office between the speaker of the House, John Boehner, and his counterpart in the Senate, Harry Reid. It was a chance encounter. Reid, a few hours earlier, had delivered a speech on the Senate floor excoriating Boehner for refusing to bring measures for a vote in the chamber he has putative control over, measures that would have averted a potentially disastrous plunge by the economy into the abyss. Still boiling with indignation, Boehner jabbed a finger at Reid and snarled "Go f--- yourself." (We can't repeat verbatim what he suggested Reid do; we are, after all, a family magazine. Suffice it to say it's an act that requires a degree of athleticism beyond that possessed by most mortals.)

What caused Mr. Boehner to be seized by the masculine equivalent of a hissy fit was that he found himself outmaneuvered by the Dems and forced to let his charges in the House vote yea or nay on whether to erase the big tax cuts and crimped spending that many envisioned down deep as the surest cure for the nation' s fiscal woes, real and potential. These unhappy worriers dealt with the possibility that such Draconian measures might send the economy spinning into another painful recession or worse, by ignoring it -- a familiar enough tactic employed by the last Congress whenever confronted by a particularly sticky problem begging to be tackled.

Backed into a corner and with a push from some GOP graybeards, Boehner, as the exchange with Harry Reid demonstrated, graciously as ever threw in the towel and eviscerated the nastier elements in the fiscal script. His surrender cleared the way to rescind the most severe tax and spending reductions that were supposed to go into effect with the dawn of the new year, and touched off a scorching rally in markets from Wall Street to Shanghai.

The response by jubilant investors, whatever their native tongue, was predictable. But more than a mite puzzling was the reaction of the mainstream media and not a few professional kibitzers to the blistering relief rally: They fell all over themselves in the rush to warn investors to wipe those smiles off their faces, because the battle of the budget was far from over, citing the likelihood of a outbreak of hostilities over the debt ceiling a month or two down the road. As if, before they rang the tocsin, that had been classified information.

Unexpectedly, the Fed's Open Market Committee added to the cloud of caution, which suddenly appeared over the markets and tempered the celebratory mood inspired by the avoidance of the fiscal cliff, by releasing minutes of their previous month's confab that were widely interpreted as promising to tighten policy as early as sometime this year. We dutifully plowed through those minutes and found a cacophony of opinion as to what the economy and markets might do. What entirely escaped our ken was the notion that the members of the FOMC were of one mind, except, perhaps, on what to have for lunch.

But let's grant that a consensus among the monetary crew is a bit more concerned about the outlook than it has been; yet to conclude that it signals a radical switch in Fed policy doesn't necessarily follow. For one thing, points out Neil Dutta of Renaissance Macro Research, new members slated to join the FOMC this year could give the agency a more dovish cast.

Moreover, as Ed Hyman's ISI Group observes, while the fiscal-cliff deal was indisputably better than going over the cliff, it also bid farewell to the payroll-tax cut, which, along with soaking the rich, translates into a $162 billion jump in the overall tax burden. Since the changes took effect on Jan. 2, the hit to disposable personal income will come in the current quarter. That means that real (adjusted for inflation) DPI will decline at a nearly 4% annual rate before hopefully staging a recovery in subsequent months. Somehow, we doubt that Fed Chairman Ben Bernanke will choose to exaggerate the impact of a less buoyant consumer mood by turning stingy on easing.

In short, there may be good and sufficient reasons to be skeptical about prospects for the economy or the market or both. There always are. But the fear that the Fed is champing at the bit to tighten up after all these years of dropping money from helicopters doesn't rank high among them.

GOLD CONTINUED TO SET RECORDS -- but not, alas, the kind that get the gold bugs all aflutter. The yellow metal took a real pounding last week, making it six weeks in a row on the downside, the longest losing streak since May 2004. Hedge funds have been dumping it hand over fist, and speculative holders as a group have sliced their positions by nearly 50%, even while central banks have been adding to theirs. India, which has been a ferocious buyer of bullion, reports Bloomberg, is ready to slap a bigger tax on gold imports.

The combination of fast money exiting and negative readings of the charts by market technicians has sent the metal spiraling downward and fanned fears that the decades of massive appreciation are coming to an end and the great bull market in bullion has seen its final days. We're not persuaded, but then we didn't foresee gold turning in as unimpressive a performance as it has these past six weeks.

What bothers us is not so much the evidence provided by its market action that gold is not invulnerable as the fact that devotees of bullion remain as steadfastly bullish as many are. Bloomberg surveyed some 49 traders and analysts, and found that the majority were still banking on gold as a hedge against inflation and a safe harbor for depreciating paper currencies, neither of which has acted as a palpable deterrent to the steadily shrinking value of the metal.

Perverse as it may sound, what we suspect is the best thing that could happen to the precious metal would be a kind of reverse gold rush -- a thorough shakeout that would send fidgety owners and wimpy technicians scurrying for the sidelines.

In other words, a bout of bearishness that just might clear the ground for a bullion revival.

A FITTING CODA TO THE MELODRAMA of the fiscal cliff and the Fed's surprising loquacity came on Friday, when the Bureau of Labor Statistics released the numbers on December employment. And, despite ruminations on Wall Street that companies were too frightened by fiscal nightmares and kindred distractions to do any serious hiring, the numbers were quietly encouraging. Encouraging enough, in any case, to help spark the S&P 500 to its biggest weekly gain in more than a year. Icing on the cake was a report by the Institute for Supply Management that the service sector had enjoyed its best rise in 10 months.

A total of 155,000 jobs were added last month. And for a change, the hiring was largely the real McCoy -- full-time slots (temps, in fact, fell by 1,000). And the gains were spread around, rather than concentrated. Helped along by efforts to undo what Hurricane Sandy had wrought, construction added 30,000 workers. Manufacturing displayed signs of life, as well, taking on 25,000 new hires. Bars and restaurants tallied 31,000 additions.

Altogether, what Philippa Dunne and Doug Henwood dub the eat, drink, and get-sick sectors (that's bars, restaurants, and health care) beefed up their employee roster by 83,000, more than half the total gain in payrolls.

Among the losers, retailers stood out in reducing their staffs by some 11,000, as the critical holiday season proved something of a mixed bag for vendors, especially in the clothing department.

The workweek edged up to 34.5 hours from 34.4. Aggregate hours were up 0.4% for the month and 2% for the year. Average hourly earnings, observe Philippa and Doug, who put out the Liscio report, are the strongest they've seen in a year. The better earnings, they feel, indicate that the labor market is tightening, at least modestly.

Turning their savvy eye on the household survey, they like what they see, as well. Total employment by that yardstick was up 28,000, but when adjusted to match the payroll concept, it swells to 270,000. They note that the gap between the two narrows to insignificance over the longer haul.

The unemployment rate was unchanged last month, and the median duration of joblessness dipped to its lowest level since September 2009. The Liscio duo cites the rise in the number of folks quitting jobs and the greater number of re-entrants as evidence of increasing confidence in the labor market.

Will this positive report, they wonder, begin to change thinking at the Fed? They remind us that it was last month that Bernanke & Co. shifted from its date-based projection of ending the zero percent to some specific-indicator-based criteria. Which they take to mean that the Fed would continue to keep rates at a minimum level so long as unemployment holds above 6.5% and inflation keeps below 2.5%.

Among the other considerations by the FOMC, which may influence what they do about rates, are labor-market conditions, the ease of finding a new job, and signs of union militancy.

What Philippa and Doug conclude is not exactly startling: namely, that a few months more of good employment reports, and it'll become more likely that the first Fed-funds rate hike will come in 2014, rather than 2015.

But they caution not to jump the gun: "We're not there yet, of course."